|
NOTES Concentrations et position dominante collective après l'arrêt Airtours : le pont sur le concept, les facteurs structurels et les critères, Jalabert-Doury, Nathalie, JCP E Semaine Juridique (édition entreprise), n° 47, 21/11/2002, pp. 01-06
JUDGMENT
OF THE COURT OF FIRST INSTANCE (Fifth Chamber, Extended Composition) 6
June 2002 (Competition
- Regulation (EEC) No 4064/89 - Decision declaring a concentration to be
incompatible with the common market - Application for annulment - Relevant
market - Collective dominant position - Proof) In
Case T-342/99, Airtours
plc,
represented by J. Swift QC and R. Anderson, Barristers, M. Nicholson, J.
Holland and A. Gomes da Silva, Solicitors, with an address for service in
Luxembourg, applicant,
v Commission
of the European Communities,
represented by R. Lyal, acting as Agent, with an address for service in
Luxembourg, defendant,
APPLICATION
for annulment of Commission Decision C(1999)3022 final of 22 September
1999 declaring a concentration to be incompatible with the common market
and the EEA Agreement (Case IV/M.1524 - Airtours/First Choice), published
under number 2000/276/EC (OJ 2000 L 93, p. 1), THE
COURT OF FIRST INSTANCE OF
THE EUROPEAN COMMUNITIES (Fifth Chamber, Extended Composition), composed
of: P. Lindh, President, R. García-Valdecasas, J.D. Cooke, M. Vilaras and
N.J. Forwood, Judges, Registrar:
J. Palacio González, Administrator, having
regard to the written procedure and further to the hearing on 11 October
2001, gives
the following Judgment Facts
and procedure
1.
On
29 April 1999, Airtours plc, a United Kingdom company whose main activity
is as a tour operator and supplier of package holidays, announced its
intention to acquire all the shares in the United Kingdom tour operator,
First Choice plc, one of its competitors. 2.
On
the same day, Airtours notified the proposed merger to the Commission
pursuant to Article 4 of Council Regulation (EEC) No 4064/89/EEC of 21
December 1989 on the control of concentrations between undertakings (OJ
1989 L 395, p.1, corrected version in OJ 1990 L 257, p. 13), as most
recently amended by Council Regulation (EC) No 1310/97 of 30 June 1997 (OJ
1997 L 180, p. 1) (hereinafter 'Regulation No 4064/89). 3.
In
its decision of 3 June 1999, the Commission found that the merger gave
rise to serious doubts as to its compatibility with the common market and
decided toinitiate the investigation procedure in accordance with Article
6(1)(c) of Regulation No 4064/89. 4.
On
9 July 1999, the Commission sent the applicant a statement of objections
under Article 18 of Regulation No 4064/89, in which it set out the reasons
why it took the view, prima facie, that the proposed merger would give
rise to a collective dominant position in the United Kingdom short-haul
foreign package holiday market. The applicant replied to the statement of
objections on 25 July 1999. 5.
A
hearing was held before the Commission Hearing Officer on 28 and 29 July
1999, pursuant to Articles 14, 15 and 16 of Commission Regulation (EC) No
447/98 of 1 March 1998 on the notifications, time limits and hearings
provided for in Regulation No 4064/89 (OJ 1998 L 61, p. 1). 6.
On
7 September 1999 the applicant submitted a set of undertakings in
accordance with Article 8(2) of Regulation No 4064/89 in order to allay
the competition concerns which had been identified. 7.
On
9 September 1999 the Advisory Committee on concentrations met and
delivered its opinion on the merger and on the undertakings put forward by
the applicant. 8.
A
meeting was held on 15 September 1999, which was attended by
representatives of the applicant and of the Commission, following which
the applicant submitted a revised set of undertakings. 9.
By
decision of 22 September 1999 (Case IV/M.1524 - Airtours/First Choice) (Decision
C(1999)3022 final, published under Number 2000/276/EC (OJ 2000 L 93, p.
1); hereinafter 'the Decision), the Commission declared that the
concentration was incompatible with the common market and the operation of
the European Economic Area under Article 8(3) of Regulation No 4064/89 on
the ground that it would create a collective dominant position in the
United Kingdom market for short-haul foreign package holidays, as a result
of which competition would be significantly impeded in the common market.
The Commission stated in the Decision that the undertakings proposed by
Airtours on 7 September 1999 would not prevent the creation of a
collective dominant position and that the undertakings put forward on 15
September 1999 were submitted too late to be considered at that stage in
the procedure. Procedure
and forms of order sought by the parties
10.
On
2 December 1999 the applicant brought the present action. 11.
Upon
hearing the report of the Judge-Rapporteur, the Court of First Instance
decided to open the oral procedure and, by way of measures of organisation
ofprocedure, the applicant and the Commission were asked to produce
certain documents and reply in writing to various questions. 12.
By
letters from the Commission of 27 July 2001 and 3 August 2001, and by
letter from the applicant of 31 August 2001, the parties complied with the
measures of organisation of procedure taken by the Court. 13.
The
parties presented oral argument and replied to the questions put to them
by the Court at the hearing on 11 October 2001. 14.
The
applicant claims that the Court should: -
annul the decision; -
order the Commission to pay the costs. 15.
The
Commission contends that the Court should: -
dismiss the action; -
order the applicant to pay the costs. Substance
16.
The
applicant relies on four pleas in law in support of its application. The
first plea alleges that there were manifest errors of assessment in the
definition of the relevant product market and infringement of Article 253
EC. The second plea alleges infringement of Article 2 of Regulation No
4064/89, breach of the principle of legal certainty in so far as the
Commission applied a new and incorrect definition of collective dominance
in its assessment of the present case, and infringement of Article 253 EC.
The third plea alleges infringement of Article 2 of Regulation No 4064/89
- in that the Commission found that the transaction created a collective
dominant position - together with infringement of Article 253 EC. The
fourth plea alleges infringement of Article 8(2) of Regulation No 4064/89
and breach of the principle of proportionality inasmuch as the Commission
did not accept the undertakings proposed by the applicant. The
first plea alleging errors in the definition of the relevant product
market and infringement of Article 253 EC
A
- The Decision 17.
The
definition of the relevant product market in the United Kingdom foreign
package holiday industry is the only definition challenged by the
applicant. TheDecision identifies two separate markets, the market for
package holidays to long-haul destinations ('long-haul package holidays)
and that for package holidays to short-haul destinations ('short-haul
package holidays). In that connection, it is specified in the Decision
that the travel industry considers the long-haul sector to comprise all
destinations involving a flight time from the United Kingdom substantially
in excess of three hours, other than flights to the islands in the Eastern
Mediterranean or the Canary Islands, which may take up to around four
hours. As a result, all European (mainland and islands) and North African
holiday destinations fall into the 'short-haul category, in contrast to
those destinations in, for example, the Caribbean, the Americas or
South-East Asia, in respect of which the flight times are substantially
longer (typically twice as long or more) (paragraphs 10 to 13 of the
Decision). 18.
At
paragraphs 16 to 28, the Decision sets out the reasons which led the
Commission to conclude that the differences between long and short-haul
package holidays are, from the point of view of competition, more
significant than the similarities and are such as to justify defining
separate markets for the purposes of an appraisal of the concentration
notified. Those reasons are the following: (a)
first, for airlines (and, therefore, for vertically integrated tour
operators) there is limited scope for substitution between long-haul and
short-haul flights, given that there is little scope for using the same
aircraft for both short and long-haul destinations and given the operating
costs for larger as compared with smaller aircraft and the difficulties
that charter airlines (including those of the parties to the merger) must
overcome if they attempt 'substantially to reconfigure [their] fleet as
between long-haul and short-haul capabilities, namely, the need to make
capital investment, the time necessary to do so and the difficulty of
leasing aircraft on a short-term basis, inasmuch as charter airlines (including
those of the parties) own most of their aircraft or lease them on
relatively long leases (typically a lease of five years) in order to
reduce costs, maintain quality and ensure continuity of supply (paragraphs
16 to 18 of the Decision); (b)
second, the fact that from the point of view of the ultimate consumer
there are a number of significant differences between short and long-haul
package holidays: (i)
the image or idea of the holiday: long-haul packages seem more exotic and
therefore appeal to single people or couples without children; short-haul
package holidays, for example to Mediterranean resorts, are of more
interest to families (paragraph 20 of the Decision); (ii)
the time when holidays are taken: long-haul package holidays are less
suited to the needs of United Kingdom consumers travelling en famille
who, for the most part, go on foreign package holidays during thesummer
season (roughly, mid-July to the end of August) so as to coincide with the
school holidays (and in some areas, factory closures) (paragraph 20 of the
Decision); (iii)
transfer time: longer flight times may deter some consumers from choosing
a long-haul package holiday, even if it is comparable in other respects to
a short-haul package, for example as regards weather, location, price,
visas, medical requirements and the like (paragraph 21 of the Decision); (iv)
lack of price substitutability between short and long-haul destinations:
prices are appreciably higher for long-haul package holidays and there is
only limited convergence between prices for that kind of holiday and
prices for comparable short-haul package holidays. Although prices for the
two kinds of holiday, particularly at certain times of the year (for
example, when the weather is bad) can sometimes be the same or not very
different, that very limited overlap is not sufficient to constrain prices
throughout the short-haul market, since the long-haul holidays concerned
are regarded as effective substitutes by only a very small proportion of
customers (paragraphs 22 to 26 of the Decision). B
- Definition of the relevant product market 19.
The
Court notes, to begin with, that, as regards the application of Regulation
No 4064/89 as envisaged in this case, a proper definition of the relevant
market is a necessary precondition for the assessment of the effects on
competition of the concentration (see, to that effect, Joined Cases
C-68/94 and C-30/95 France and Others v Commission ('Kali
& Salz) [1998] ECR I-1375, paragraph 143). 20.
The
definition of the market in the products affected by the merger must take
account of the overall economic context so as to make it possible to
assess the actual economic power of the undertaking or undertakings in
question and, for that purpose, it is necessary first to define the
products which, although incapable of being substituted for other products,
are sufficiently interchangeable with the undertaking's own products, both
as regards their objective characteristics and the competitive conditions
and the structure of supply and demand on the market (see, to that effect,
Case C-333/94 P Tetra Pak v Commission [1996] ECR I-5951,
paragraphs 10 and 13, and Case T-83/91 Tetra Pak v Commission
[1994] ECR II-755, paragraph 63). 21.
The
applicant challenges the definition of the relevant product market given
in the Decision. Rather than limiting the relevant market to that for
short-haul foreign package holidays, the Commission should have defined it
as the market comprising all foreign package holidays, including long-haul
packages. The applicant complainsthat the Commission has departed from
previous practice regarding the definition of the foreign package holiday
market and maintains that the Commission's assessment of demand-side and
supply-side substitutability is incorrect. As a result of that flaw in the
Commission's reasoning the Decision is vitiated by manifest errors of
assessment and thus an error of law. 22.
As
regards the Commission's proposition that there is no demand-side
substitutability between long and short-haul package holidays, the
applicant submits that the Commission's arguments concerning, first, the
various product characteristics and, second, the differences in average
prices for long and short-haul package holidays are mistaken. 23.
It
refers, first, to product characteristics and challenges the Commission's
contention that long-haul holidays are more exotic, are less suitable for
families and involve longer flight times. Thus, short-haul destinations,
such as Turkey or North Africa, are more 'exotic than long-haul
destinations, such as Florida or the Dominican Republic, which are more 'family
destinations. Travel time to the resort can be as long for short-haul
destinations as for long-haul, since what matters is total travel time,
including check-in and transfers, rather than flight time in the strict
sense. Finally, the applicant claims that variety in the type of holidays
offered by tour operators to take account of different lifestyles (for
example, family or non-family) and variety of tastes (in particular, so
far as accommodation, food, activities, interests and the like are
concerned) exists within both the long-haul holiday segment and the
short-haul holiday segment. 24.
Second,
regarding difference in holiday prices, the applicant argues that it is
irrelevant to point out that average prices for long-haul destinations
exceed those for short-haul destinations when, as in this instance, the
products are clearly differentiated. The applicant also points to a price
convergence between the two types of holidays, since some short-haul
holidays are in the same price-range as some long-haul holidays. 25.
The
Court notes that it is apparent from the documents before it that the
Commission took account of consumer preferences, average flight time, the
level of average prices and the limited interchangeability of the aircraft
used for each type of destination in reaching its conclusion that
short-haul package holidays belong to a separate market from that to which
long-haul packages belong. The Commission came to that conclusion, while
not, however, disputing that long-haul package holidays are becoming
increasingly popular with consumers or that the market studies cited by
the applicant in its reply to the statement of objections (see British
National Travel Survey 1998, volume 4, The 1998 Holiday Market, and
Mintel, Holidays: The booking procedure, 1997) illustrate the
tendency of United Kingdom consumers to go further afield for their
holidays and particularly to the other side of the Atlantic. Nor did it
question the fact that a substantial number of short-haul holidaymakers
have also taken a long-haul holiday in the last five years (36%) and that
a much greater number (62%) are 'very or 'fairly likely to doso over the
next five years, as the applicant has indicated in Table 2.4 in its reply
to the statement of objections. 26.
The
Court must therefore consider whether the Commission made a manifest error
of assessment when it concluded that those factors were reasons for
defining the relevant product market narrowly and excluding long-haul
package holidays, which it did not regard as sufficiently interchangeable
with short-haul package holidays. 27.
First,
concerning the average flight time, the Commission pointed out - and was
not challenged by the applicant on this point - the significant difference
between the average flight time to long-haul destinations, which is over
eight hours, and the average flight time to short-haul destinations, which
is usually less than three hours (from the United Kingdom, flights to the
islands in the Eastern Mediterranean or the Canary Islands may take up to
around four hours). The applicant argues that, in practice, what matters
to consumers is not the flight time but the total travel time from the
home town to the resort. However, it cannot rely on that argument to play
down the indisputable difference between average flight times (three hours
on average for flights to short-haul destinations compared with eight
hours on average for flights to long-haul destinations), since transfer
time from the airport to the resort may in fact also vary, whatever the
destination. 28.
Second,
as regards the importance to be attached to the prices of the two types of
holiday and their impact on consumers, the Commission found that
differences between the average price of a long-haul package holiday and
that of a short-haul package are such as to warrant separate market
definition. It should be observed in that regard that the Commission
accepts that there is a degree of convergence between prices for the two
kinds of holiday. However, it contends that the convergence is not such
that the two products may be regarded as substitutes or that the prices of
one constrain prices of the other. 29.
At
paragraph 23 of the Decision the Commission explains its reasons for
finding that there was no price substitutability between the two kinds of
holiday. It considers the prices offered to the consumer to be
significantly higher for long-haul package holidays, as reflected in the
information supplied by the applicant in Annex 1a to its response of 29
June 1999 to the Commission's request for information. 30.
First,
the Commission found that there was a difference of over 100% between the
average brochure price of long-haul package holidays for the 1998 summer
season and that of short-haul packages. It also considered the question
comparing similar packages (14 nights, 3-star, self-catering) in Florida
and Spain and found that the latter cost on average about half the price
of the former. A similar comparison between Florida and Greece or the
Canaries gave broadly equivalent results (a difference of around 30 to 40%
for catered accommodation). The Decision gives detailed examples of price
comparisons between certain short and long-haul tourist destinations
offered in the Airtours brochure, which show that significant price
differentials exist between the two kinds of destination. 31.
The
applicant disputes the relevance of average prices as a means of comparing
the effect of prices on consumers' decisions where the products are
clearly differentiated. It submits that what is significant for defining
the relevant product market is the behaviour of 'customers at the margin
and the question of whether they would be prepared to substitute long-haul
package holidays for short-haul packages if the price of the latter were
to rise. The Commission acknowledges that average prices do not
necessarily reflect prices at the margin but is of the view that, where -
as in the present case - the differences are so significant, it is
unlikely that a sufficient range of genuinely comparable long-haul package
holidays is available at prices which are sufficiently similar to
constrain prices of short-haul packages, since the long-haul packages
concerned are regarded as genuine substitutes by only a very small
proportion of the customers. 32.
It
is therefore appropriate to consider whether the Commission made a
manifest error of assessment in relation to the significance of the margin,
that is, the number of customers prepared to react to a price increase in
short-haul package holidays by purchasing a long-haul package holiday, as
compared with the total number of customers who habitually purchase a
short-haul package holiday from tour operators. 33.
In
that regard, the Court notes in limine that it is common ground
between the parties that United Kingdom consumers of foreign package
holidays are generally very sensitive to the prices of the products. 34.
The
Commission's argument is set out at paragraph 24 of the Decision, in which
it acknowledges that 'prices of some holidays at certain long-haul
destinations, particularly at certain times of the year (e.g. during
periods when bad weather is expected) match or come close to those at the
upper end (summer peak, better quality accommodation) of the price/quality
scale for short-haul ones. It nevertheless went on to conclude that 'it is
not to be expected that this very limited overlap would suffice to
constrain prices throughout the short-haul market, since the long-haul
holidays concerned would not be regarded as effective substitutes - either
on price or other grounds - by more than a very small proportion of
customers. 35.
In
support of that finding, the Commission points out at paragraph 25 of the
Decision that none of the long-haul destinations cited by the applicant in
its reply to the statement of objections (Table 2.6) in support of its
view on price convergence was in the same price-range as that which it had
previously supplied. 36.
An
examination of Annexes 1a and 2 to the applicant's letter of 29 June 1999
responding to the Commission's requests for information of 15 and 21 June
1999 (documents produced by the Commission in the context of measures of
organisation of procedure, see Annex 6b/7b to the first set of documents
produced by the Commission) reveals that the Commission was right in
holding that the differences in average prices are significant, especially
if the comparison relates tothe same season (summer or winter). Annex 1a
in fact shows that for the summer seasons of 1996, 1997 and 1998, average
prices per week for short-haul package holidays were, respectively, GBP
354, GBP 378 and GBP 369, while the corresponding figures for long-haul
packages were, respectively, GBP 676, GBP 757 and GBP 781. 37.
Furthermore,
a review of those documents establishes that the Commission's assessment
at paragraph 25 of the Decision is well founded. It is apparent from Annex
2 to the applicant's letter of 29 June 1999 that, for short-haul
destinations, the applicant had indicated that typical holidays, for
example a week in a 3-star hotel, half board, in Majorca, in July or
August 2000, cost GBP 485. The figures are appreciably lower than the
figures in Table 2.6 on page 21 of the reply to the statement of
objections, which is referred to at paragraph 25 of the Decision. Only the
prices of holidays offered for December 1999 to Jamaica (GBP 699), Mexico
(GBP 649) and Sri Lanka (GBP 699) are closer to the average figures for
short-haul destinations applying for the summer season 2000. 38.
Likewise,
the documents produced by the applicant bear out the Commission's
argument. As stated at paragraph 26 of the Decision, it can be seen that
in the BA Holidays advertisement for long-haul package holidays produced
by the applicant at the hearing before the Commission (see paragraph 26 of
the Decision, footnote 23), four destinations were offered at very
competitive prices: Barbados (GBP 399), Tobago (GBP 499), Grenada (GBP
529) and St Lucia (GBP 799). However, as the Commission points out, only
the package to St Lucia included food, the other holidays included only
the flight and the accommodation. In addition, the prices were low-season
prices valid for September and October 1999. 39.
It
should be added that in its reply of 29 June 1999 to the Commission's
enquiries of 15 and 21 June 1999 the applicant cited as an example of one
of its typical products a summer holiday in Majorca in a 3-star hotel,
costing approximately GBP 485, plus a flight supplement. 40.
Further,
the applicant acknowledged at the hearing that it publishes separate
brochures for short and long-haul package holidays. 41.
In
those circumstances, the Commission's proposition that only a small
proportion of the customers of the main United Kingdom tour operators
regard long-haul package holidays as substitutes in terms of value for
money for short-haul package holidays cannot be regarded as manifestly
incorrect. 42.
The
other arguments advanced by the applicant do not invalidate that finding. 43.
The
applicant argues that industry-wide studies treat long-haul package
holidays as part of the mainstream. It cites, in particular, 'Holidays
- The Booking Procedure, a study by Mintel, in which the point is made
that 'long-haul has broken into the mainstream holiday market. While based
on a desire to travel further and see theworld outside Europe, pricing has
inevitably come into play as a key element in the consumer's choice. In
addition, the Commission should have taken into account the statements of
third party tour operators obtained in the course of its enquiry, which
also show the growing importance of substitution between long and
short-haul package holidays. 44.
However,
in the circumstances of the present case and with reference to market
definition, the fact that the Commission did not consider decisive (i)
changing consumer tastes, (ii) the growing importance of substitutability
between long-haul package holidays to destinations such as Florida and the
Dominican Republic, and short-haul packages or (iii) the growth of the
market for long-haul packages over recent years is not sufficient to
support a finding that the Commission exceeded the bounds of its
discretion in concluding that short-haul package holidays are not within
the same product market as long-haul packages. 45.
Third,
as to the applicant's arguments relating to supply-side substitutability
and the interchangeability of the aircraft used on short and long-haul
routes, the Commission cannot be criticised for having formed the view
that the fact that certain dual-purpose aircraft, such as the Boeing 757,
may be used to some extent both for long and short-haul destinations was
not sufficiently decisive, given the other findings made concerning
demand-side product substitutability, to lead it to adopt a wider market
definition. In that regard, it is appropriate to refer, as the applicant
itself has done, to paragraph 13 of the Commission Notice on the
definition of the relevant market for the purposes of Competition Law (OJ
1997 C 372, p. 5): 'From
an economic point of view, for the definition of the relevant market,
demand substitution constitutes an immediate and effective disciplinary
force on the suppliers of a given product, in particular in relation to
their pricing decisions. 46.
Finally,
the applicant cannot rely on a failure to state reasons in relation to the
definition of the relevant market. 47.
The
Commission devoted a significant part of the Decision (paragraphs 5 to 28)
to explaining why it considered the relevant market to be limited to the
market for short-haul package holidays. The Decision thus discloses, in a
clear and unequivocal fashion, the Commission's reasoning relating to the
definition of the relevant market, in such a way as to enable the
Community Courts to exercise their power of review and the persons
concerned to be aware of the reasons for the measure in order to defend
their rights (see Case C-350/88 Delacre and Others v Commission
[1990] ECR I-395, paragraph 15). 48.
It
follows that the first plea must be rejected as unfounded. The
second plea alleging infringement of Article 2 of Regulation No 4064/89,
breach of the principle of legal certainty and infringement of Article 253
EC inasmuch as the Commission applied an incorrect definition of
collective dominance in its appraisal of the present case
49.
The
applicant complains that the Commission, for the purposes of the Decision,
applied a new and incorrect definition of 'collective dominance, which is
set out generally at paragraphs 51 to 56 of the Decision, departing from
its previous decisions, from Community case-law and from sound economic
principles, and also infringing Article 2 of Regulation No 4064/89. The
Commission thereby also acted in breach of the principle of legal
certainty and Article 253 EC, inasmuch as the Decision is vitiated by a
defective statement of reasons. 50.
The
Commission denies that it adopted a new approach and maintains that it
applied the test for collective dominance already used by it in previous
cases and approved by the Court of First Instance in its judgment in Case
T-102/96 Gencor v Commission [1999] ECR II-753. 51.
It
is appropriate to point out that the abovementioned paragraphs of the
Decision (51 to 56) are in Part VA of the Decision, in which the
Commission sets out, purely by way of introduction and summary, the
reasons which led it to conclude that the concentration would give rise to
the creation of a dominant position and in which it replies generally to
observations made by the applicant during the administrative procedure
concerning certain of the characteristics of a collective dominant
position. 52.
In
the introduction to its legal analysis of the concentration, the
Commission merely sketches the broad outlines of its findings on the
effects of the merger, which are subsequently explained and developed in
detail at paragraphs 57 to 180 of the Decision. 53.
Since
the Decision is a measure applying Article 2 of Regulation No 4064/89 to a
specific concentration, the Court must, in its review of the legality of
the Decision, confine itself to the position adopted by the Commission in
relation to the transaction as notified, that is to say, it must examine
the way in which the law has been applied to the facts and adjudicate on
the merits of the Commission's findings concerning the effects of the
concentration on competition. In this case, the specific findings relating
to the impact of the transaction on competition, which led the Commission
to conclude that the concentration should be prohibited, are stated and
developed in paragraphs 57 to 180 of the Decision and are challenged by
the applicant in its third plea. 54.
It
is therefore necessary to consider, first, the merits of the arguments
raised by the applicant in its third plea and, at the same time, to take
into account its arguments concerning the Commission's general findings at
paragraphs 51 to 56 of the Decision. The
third plea alleging (i) infringement of Article 2 of Regulation No 4064/89
in that the Commission found that the concentration would create a
collective dominant position, and (ii) infringement of Article 253 EC
55.
By
this plea, the applicant seeks to show that the Commission made an error
of assessment in deciding that the proposed merger should be prohibited.
It claims that the Decision does not prove to the requisite legal standard
that the outcome of the transaction would be the creation of a collective
dominant position of such a kind as significantly to impede competition in
the relevant market. In prohibiting the merger, the Commission thus
infringed Article 2 of Regulation No 4064/89. A
- General considerations 56.
Under
Article 2(2) of Regulation No 4064/89, a concentration which does not
create or strengthen a dominant position as a result of which effective
competition would be significantly impeded in the common market or in a
substantial part of it is to be declared compatible with the common market.
57.
Under
Article 2(3) of the Regulation, a concentration which creates or
strengthens a dominant position as a result of which effective competition
would be significantly impeded in the common market or in a substantial
part of it is to be declared incompatible with the common market. 58.
Where,
for the purposes of applying Regulation No 4064/89, the Commission
examines a possible collective dominant position, it must ascertain
whether the concentration would have the direct and immediate effect of
creating or strengthening a position of that kind, which is such as
significantly and lastingly to impede competition in the relevant market (see,
to that effect, Gencor v Commission, paragraph 94). If there
is no substantial alteration to competition as it stands, the merger must
be approved (see, to that effect, Case T-2/93 Air France v Commission
[1994] ECR II-323, paragraphs 78 and 79, and Gencor v Commission,
paragraph 170, 180 and 193). 59.
It
is apparent from the case law that 'in the case of an alleged collective
dominant position, the Commission is ... obliged to assess, using a
prospective analysis of the reference market, whether the concentration
which has been referred to it leads to a situation in which effective
competition in the relevant market is significantly impeded by the
undertakings involved in the concentration and one or more other
undertakings which together, in particular because of factors giving rise
to a connection between them, are able to adopt a common policy on the
market and act to a considerable extent independently of their competitors,
their customers, and also of consumers (Kali & Salz, cited
above, paragraph 221, and Gencor v Commission, paragraph
163). 60.
The Court of First Instance has held that: 'There is no reason whatsoever in legal or economic terms to exclude from the notion of economic links the relationship of interdependence existing between the parties to a tight oligopoly within which, in a market with the appropriate characteristics, in particular in terms of market concentration, transparency and product homogeneity, those parties are in a position to anticipate one another's behaviour and are therefore strongly encouraged to align their conduct in the market, in particular in such a way as to maximise their joint profits by restricting production with a view to increasing prices. In such a context, each trader is aware that highly competitive action on its part designed to increase its market share (for example a price cut) would provoke identical action by the others, so that it would derive no benefit from its initiative. All the traders would thus be affected by the reduction in price levels. (Gencor v Commission, paragraph 276). 61.
A
collective dominant position significantly impeding effective competition
in the common market or a substantial part of it may thus arise as the
result of a concentration where, in view of the actual characteristics of
the relevant market and of the alteration in its structure that the
transaction would entail, the latter would make each member of the
dominant oligopoly, as it becomes aware of common interests, consider it
possible, economically rational, and hence preferable, to adopt on a
lasting basis a common policy on the market with the aim of selling at
above competitive prices, without having to enter into an agreement or
resort to a concerted practice within the meaning of Article 81 EC (see,
to that effect, Gencor v Commission, paragraph 277) and
without any actual or potential competitors, let alone customers or
consumers, being able to react effectively. 62.
As
the applicant has argued and as the Commission has accepted in its
pleadings, three conditions are necessary for a finding of collective
dominance as defined: -
first, each member of the dominant oligopoly must have the ability to know
how the other members are behaving in order to monitor whether or not they
are adopting the common policy. As the Commission specifically
acknowledges, it is not enough for each member of the dominant oligopoly
to be aware that interdependent market conduct is profitable for all of
them but each member must also have a means of knowing whether the other
operators are adopting the same strategy and whether they are maintaining
it. There must, therefore, be sufficient market transparency for all
members of the dominant oligopoly to be aware, sufficiently precisely and
quickly, of the way in which the other members' market conduct is evolving;
-
second, the situation of tacit coordination must be sustainable over time,
that is to say, there must be an incentive not to depart from the common
policy on the market. As the Commission observes, it is only if all the
members of the dominant oligopoly maintain the parallel conduct that all
can benefit. The notion of retaliation in respect of conduct deviating
from the common policy is thus inherent in this condition. In this
instance, theparties concur that, for a situation of collective dominance
to be viable, there must be adequate deterrents to ensure that there is a
long-term incentive in not departing from the common policy, which means
that each member of the dominant oligopoly must be aware that highly
competitive action on its part designed to increase its market share would
provoke identical action by the others, so that it would derive no benefit
from its initiative (see, to that effect, Gencor v Commission,
paragraph 276); -
third, to prove the existence of a collective dominant position to the
requisite legal standard, the Commission must also establish that the
foreseeable reaction of current and future competitors, as well as of
consumers, would not jeopardise the results expected from the common
policy. 63.
The
prospective analysis which the Commission has to carry out in its review
of concentrations involving collective dominance calls for close
examination in particular of the circumstances which, in each individual
case, are relevant for assessing the effects of the concentration on
competition in the reference market (Kali & Salz, paragraph
222). As the Commission itself has emphasised, at paragraph 104 of its
decision of 20 May 1998 Price Waterhouse/Coopers & Lybrand
(Case IV/M.1016) (OJ 1999 L 50, p. 27), it is also apparent from the
judgment in Kali and Salz that, where the Commission takes the view
that a merger should be prohibited because it will create a situation of
collective dominance, it is incumbent upon it to produce convincing
evidence thereof. The evidence must concern, in particular, factors
playing a significant role in the assessment of whether a situation of
collective dominance exists, such as, for example, the lack of effective
competition between the operators alleged to be members of the dominant
oligopoly and the weakness of any competitive pressure that might be
exerted by other operators. 64.
Furthermore,
the basic provisions of Regulation No 4064/89, in particular Article 2
thereof, confer on the Commission a certain discretion, especially with
respect to assessments of an economic nature, and, consequently, when the
exercise of that discretion, which is essential for defining the rules on
concentrations, is under review, the Community judicature must take
account of the discretionary margin implicit in the provisions of an
economic nature which form part of the rules on concentrations (Kali
& Salz, paragraphs 223 and 224, and Gencor v Commission,
paragraphs 164 and 165). 65.
Therefore, it is in the light of the foregoing considerations that it is necessary to examine the merits of the grounds relied on by the applicant to show that the Commission made an error of assessment in finding that the conditions for, or characteristics of, collective dominance would exist were the transaction to be approved. |
|
|
Index Législation Index Doctrine Index Actualité Jurisprudentielle INDEX GENERAL |